Determining the Required Coverage Amount

When fidelity/crime insurance is required, the underwriter must review the project legal documents or other source acceptable to the underwriter to verify whether the HOA and any associated management company adhere to one or more of the financial controls listed below:

• Separate bank accounts are maintained for the working account and the reserve account, each with appropriate access controls, and the bank in which funds are deposited sends copies of the monthly bank statements directly to the HOA .

• The management company maintains separate records and bank accounts for each HOA that uses its services, and the management company does not have the authority to draw checks on, or transfer funds from, the reserve account of the HOA.

• Two members of the Board of Directors must sign any checks written on the reserve account.

The following table describes how to determine the minimum required amount of fidelity/crime insurance.

If the HOA	Then the fidelity/crime insurance coverage amount must equal at least...
adheres to one or more of the financial controls above	the sum of three months of assessments on all units in the project.
does not adhere to one or more of the financial controls above	the maximum funds that are in the custody of the HOA or its management agent, at any time.

Note: In states that have statutory fidelity/crime insurance requirements, Homium accepts those requirements in place of its own.